Question

This problem continues the Davis Consulting, Inc. situation from Problem. Davis Consulting uses a job order costing system in which each client is a different job. Davis assigns direct labor, daily per diem, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2016, the controller prepared the following budget:


In November 2016, Davis served several clients. Records for two clients appear here:


Requirements
1. Compute Davis’s predetermined overhead allocation rate for 2015.
2. Compute the total cost of each job.
3. If Davis wants to earn profits equal to 25% of sales revenue, what fee should it charge each of these two clients?
4. Why does Davis assign costs tojobs?


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  • CreatedJanuary 16, 2015
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